Quiz #654 answers

• 1. If the external sector was running a surplus equivalent to 4 per cent of GDP, and the sum of all the private sector spending plans indicated it was desiring to run a surplus overall equivalent to 6 per cent, then the government could safely plan on achieving a fiscal surplus of 2 per cent of GDP.

Answer: False

• 2. The automatic stabilisers work counter-cyclically without any discretionary changes by government and push the fiscal balance back to its appropriate level after a major cyclical disturbance.

Answer: False

• 3. The monetary base always adjusts by increasing when commercial banks increase their loans.

Answer: True